In a welcome turn of events, American workers are seeing their paychecks grow faster than inflation for the first time in two years. This development provides some financial relief but complicates the Federal Reserve‘s efforts to control price increases, The Wall Street Journal reports.
Wage Growth Outpaces Inflation
According to the Labor Department, inflation-adjusted average hourly wages rose 1.2% in June from a year earlier. This marks the second consecutive month of seasonally adjusted gains after two years of eroded raises due to price increases.
“I don’t see inflation right now as being the problem it was many months ago,” said Amy Silverman, a Brooklyn resident.
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Fed’s Inflation-Fighting Efforts
The Federal Reserve has increased its benchmark interest rate 10 times since March 2022, contributing to a slowdown in the U.S. economy. However, the labor market and wage growth remain robust.
“It’s great to see wage increases, particularly for people at the lower end of the income spectrum,” said Federal Reserve Chair Jerome Powell.
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